2021 (8) TMI 1108 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Financial Debt - existence of debt and dispute or not - HELD THAT - The Corporate Debtor has not disputed the fact that the Financial Creditor has invested in the Corporate Debtor in the form of Non-convertible Debentures (NCDs) in multiple tranches to the tune of ₹ 31,75,00,000/-. Further, the amount raised pursuant to the debentures would qualify to be a financial debt' as per Section 5(8)(c) of IBC, 2016. It is seen from the records, that the Respondent/Corporate Debtor has preferred only to file the written submission and not reply to the Application filed by the Financial Creditors. From the written submission submitted by the Corporate Debtor it is seen that they not disputed the debt nor default. In the circumstances there is a clear evidence in the case of the existence of 'financial debt' and the 'default' of such financial debt which is payable by the Corporate Debtor to the Financial Creditor. Under the said circumstances, this Tribunal is left with no other option but to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. This Application filed by the Financial Creditor is required to be admitted under Section 7(5) of the IBC, 2016 - The application is admitted - moratorium declared.

Summary

Issues Involved:
1. Application under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Change of name of the Financial Creditor.
3. Financial debt and default.
4. Security interests created by the Corporate Debtor.
5. Appointment of Interim Resolution Professional (IRP).
6. Initiation of Corporate Insolvency Resolution Process (CIRP).
7. Moratorium under Section 14 of the IBC.

Issue-wise Detailed Analysis:

1. Application under Section 7 of the Insolvency & Bankruptcy Code, 2016:
The application was filed by M/s. Nippon Life India AIF Management Limited (Financial Creditor) under Section 7 of the Insolvency & Bankruptcy Code, 2016 (I & B Code, 2016) read with Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against M/s. Green Valley's Shelters Private Limited (Corporate Debtor). The Financial Creditor sought to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare a moratorium, and appoint an Interim Resolution Professional (IRP).

2. Change of Name of the Financial Creditor:
Originally, the application was filed in the name of M/s. Reliance AIF Management Company Limited, which later changed its name to M/s. Nippon Life India AIF Management Limited. The Tribunal allowed the amendment of the cause title to reflect the new name.

3. Financial Debt and Default:
The Financial Creditor claimed a financial debt of ?36,59,28,316. The debt arose from the subscription to senior, secured, unrated, unlisted, fully redeemable, non-convertible debentures (NCDs) in multiple tranches. The Corporate Debtor defaulted on the repayment, with initial defaults occurring on 30.09.2018 and 31.12.2018. Despite several reminders and notices, the Corporate Debtor failed to repay the outstanding amount.

4. Security Interests Created by the Corporate Debtor:
To secure the repayment, the Corporate Debtor created several security interests in favor of the Financial Creditor, including:
- First and exclusive charge on underlying freehold lands and development rights.
- First and exclusive charge on project receivables.
- Corporate and personal guarantees.
- Demand promissory note for the NCDs.
- Purchase Option Agreement with respect to mortgaged properties.

5. Appointment of Interim Resolution Professional (IRP):
The Financial Creditor proposed Mr. S. Krishnan as the IRP, who consented to the appointment. The Tribunal appointed Mr. S. Krishnan as the IRP to take forward the CIRP process.

6. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Tribunal found clear evidence of financial debt and default. The Corporate Debtor did not dispute the debt or default. Consequently, the Tribunal admitted the application under Section 7(5) of the IBC, 2016, and initiated the CIRP against the Corporate Debtor.

7. Moratorium under Section 14 of the IBC:
Upon admission of the application, a moratorium was declared under Section 14(1) of the IBC, which includes:
- Suspension of all suits or proceedings against the Corporate Debtor.
- Prohibition of transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Prevention of any action to foreclose or enforce any security interest.
- Protection of the Corporate Debtor's property from recovery by owners or lessors.

The moratorium shall remain in effect until the completion of the CIRP or until the approval of a resolution plan or liquidation order by the Adjudicating Authority.

Conclusion:
The Tribunal admitted the application, initiated the CIRP, appointed the IRP, and declared a moratorium as per the provisions of the IBC, 2016. The order was communicated to the relevant parties and authorities for further action.